Prime minister Costas Karamanlis met on Friday with development
minister Costis Hatzidakis for a review of the bill currently being
drafted aiming at simplifaction of the procedure for establishing a
company from the present 17-18 steps to just 3-4 steps.

"The goal is to make life easier for new entrepreneurs, and especially
for the small and medium size enterprises (SMEs)," Hatzidakis told
reporters after the meeting.

He also announced that the government to further advance transparency
in public sector procurements through a more modern, more transparent
and more European system that will take advantage of the possibilities
offered by the internet.

"Transparency is high in the government's priorities," the minister
stressed, noting that the aim is to make public all the procurements
and tenders via the internet.

Greek Foreign Minister Dora Bakoyannis stressed on Friday that Greece's
aim remains to end the Turkish occupation of Cyprus in the framework of
an overall, mutually acceptable, just and viable solution of the Cyprus
problem, on the basis of UN resolutions and European Union principles.

In a statement on the occasion of the completion of 35 years since the
Turkish invasion against Cyprus in the summer of 1974, Bakoyannis
reiterates Greece's support to the initiative and the effort of Cypriot
President Demetris Christofias to reach a Cypriot solution to the
Cyprus problem and calls upon Turkey to prove in deeds that it can
follow European principles and values.

"The wounds which the invasion and continuous occupation of the
Republic of Cyprus have left behind must close and the Cypriot people
should be able to live again reunited and safe in the EU", she says.

Bakoyannis notes that Turkey still holds the key for the solution of
the Cyprus problem, pointing out that Turkey's role is crucial.

"A positive response by Turkey would contribute to the achievement of a
solution that would give a new impetus to its EU accession course and
to the promotion of Greco-Turkish relations", she notes.

Referring to the 20th of July 1974, day of the Turkish invasion against
Cyprus, she points out the tragic consequences of the invasion, the
refugees, the mass violation of human rights, the destruction of
cultural sites and the humanitarian issue of the missing persons.

The foreign minister points to Turkey's policy to illegally bring to
Cyprus settlers from Anatolia, saying that this policy continues until
today, "changing the demographic and cultural structure of the
island".

"The international community has not accepted and will never recognise
the faits accomplis of violence in Cyprus", she concludes.

Turkey invaded Cyprus in July 1974. As a result of the Turkish invasion
37% of the Cypriot territory remains under Turkish occupation since
1974.

The Greek foreign ministry said on Friday that it would continue
following develpoments on the issue of a Turkish government decision to
proceed to geophysical researches in the eastern Mediterranean and
specifically in the region south and east of the Greek island of
Kastellorizo, while it would "proceed to all appropriate actions in
order to defend Greece's sovereign rights."

"Yesterday's (Thursday's) publication in Turkey's Government Gazette of
a decision taken on July 30, 2008, regarding geophysical researches in
the eastern Mediterranean and specifically in the region south and east
of the island of Kastellorizo, is contrary to the rules of the Law of
the Sea and in no way can harm Greece's sovereign rights and
responsibilities which are founded on International Law," Foreign
Minister Spokesman Gregoris Delavekouras said in a statement.

"Our positions on the issue are given and have been repeatedly
communicated to the Turkish side. According to the relevant provisions
of the International Convention on the Law of the Sea, part of the
region mentioned in the (Turkish) publication includes Greek
continental shelf," the spokesman added, indicating that Greece's
ambassador to Turkey has already contacted relevant Turkish foreign
ministry officials.

"The foreign ministry will continue following developemnts on the issue
and it proceeds to all appropriate actions in order to defend Greece's
sovereign rights," Delavekouras concluded.

On its part, a main opposition PASOK spokesman, commenting on the
issue, said that while "everyday Turkey tables a new issue which
aggravates Greek-Turkish relations, at the same time, it is being
confirmed, every day, that the New Democracy (ND) government has no
plan, has no tactics and no strategy vis-a-vis Turkey."

Government spokesman Evangelos Antonaros on Friday dismissed reports
that social insurance funds might be unable to pay pensions as
"exaggerations bearing no relation to reality".

He stressed that the state guaranteed the pensions and benefits due to
Greek citizens and that state insurance funds, following the reform
currently being carried out and the difficulties that this had faced,
were "now on the path to getting their house in order".

The spokesman reported that steady progress was being made in
computerising state social insurance funds, with 7.5 million Greeks
having received the social security numbers AMKA.

"This isn't just a formality but something that will greatly facilitate
relations between the insured and their social insurance funds," he
stressed.

For pension funds facing financial difficulties, such as freelance
professions insurance fund OAEE, the deficit was covered by the state
budget each month, the spokesman stressed.

He admitted to the existence of "some problems" but stressed that the
reports, in the form and extent of the claims they were making, were
unjustified and sought merely to cause concern.

The spokesman urged patience, saying the reforms could not have an
effect from one day to the next and that problems that had built up and
been out of control for many years could not be fixed in the space of a
few months.

Concerning professions classed as heavy or hazardous to health - and
whether a reduction in pensions or later retirement for these were
ways envisaged as ways of solving the problems of state insurance funds
- Antonaros stressed that clear answers had already been given on these
issues by the government.

He pointed out that the government had announced plans to change the
list of heavy and hazardous professions beforehand and then conducted a
public dialogue through committees set up to "rationalise" this list.

The spokesman noted that many of the professions on this list no longer
exist, while for others their inclusion was no longer justified. He
also clarified that the measures decided on would only apply to those
entering such professions from now on.

"In spite of the government's clearly stated position on this, there
are people trying to generate concerns and doubts in those already
working in these professions," he added.

Government spokesman Evangelos Antonaros suggested Friday that main
opposition PASOK leader George Papandreou should focus on drawing up a
plan of substantive proposals concerning the real problems facing the
country when called to comment on statements made by Papandreou at the
Symi Symposium.

Antonaros underlined that "the government never hid the problems from
the Greek people" and added that if PASOK's suggestions were
implemented, they would cost billions of euros to Greek taxpayers. The
main opposition avoided adopting a substantive and binding stance
toward specific problems, he added. "Their position is always negative.
This is no contribution to the solution of the country's problems,"
Antonaros stated.

"On the contrary, the government gives solutions and offers a way out
of the problems that arise, considering that we are in the midst of a
global economic crisis that only naturally has an impact here as well,"
Antonaros stated. "Its repercussions, however, are smaller than those
in other neighboring countries, which are comparable to us both in
terms of the structure and size of their economies," he concluded.

Main opposition PASOK spokesman George Papaconstantinou stated Friday
that regulations which are an insult to public sentiment will not be
supported. He was commenting on a regulation sponsored by Parliament
President Dimitris Sioufas suggesting that parliament take over the
social insurance bills for MPs who do not practice a profession
following the abolition of the "professional incompatibility" clause.

Referring to the proposals made by PASOK President George Papandreou
regarding "green development", he stated that ruling New Democracy (ND)
should realize that "these are proposals that are being adopted across
Europe even by conservative governments."

On the state of the social insurance funds, Papaconstantinou noted that
figures presented by the workers showed them to be "in the worst
position of the past 60 years." "Five major social insurance funds need
roughly 5 billion euros to meet their obligations," he added, while
underlining that "social insurance contribution evasion is out of
control."

Regarding the"closed professions," Papaconstantinou stressed that PASOK
has repeatedly backed their change of status, underlining that such a
reform would improve the services provided to the people. He added,
however, that their "opening" should take place with certain
guarantees.

On the meeting of the Liquidity Implementation Supervision Council
concerning the utilization of the 28-billion-euro package allocated by
the State in support of the banking system, Papaconstantinou maintained
that "the ritual will continue but the small and medium size businesses
will see no results," accusing the government of "failing to introduce
liquidity to the real economy, as proven by the figures concerning
bounced cheques and business financing."

"We are following with great concern the novel influenza phenomenon as
it unfolds," Papaconstantiou stated referring to the pandemic. He
underlined that it is "the duty of a well-governed state to keep the
people informed on what they should and should not do," and called on
the ministry of health to provide that information.

Referring to the incidents in Grammatiko, in northeast Attica, and the
reactions of local people who oppose plans to establish a landfill site
for Attica in the area, he underlined that a solution can be found
through discussion, adding that "certain old plans need to be
reconsidered."

[07] PASOK calls for immediate briefing by the health minister on the
measures against novel influenza

Twelve main opposition PASOK MPs have requested that the minister of
health immediately brief the parliamentary Standing Committee on Social
Affairs on the measures taken to cope with an anticipated outbreak of
A/H1N1 novel influenza (also known as swine flu).

In a letter addressed to committee chairman Panagiotis Melas, they
underlined that based on the World Health Organization (WHO) the
confirmed novel influenza cases worldwide have reached 100,000 warning
of further increase in September.

A group of Greek school children and their escorts that contracted
A/H1N1 novel influenza while attended summer courses at the
universities of Oxford and York in the United Kingdom began returning
to Greece on Friday, having fully recovered from their bout with the
illness.

Sixteen of the 22 Greek students attending classes at Oxford came down
with the disease and were treated in their rooms, as well as 12 of the
16 attending a summer course in York. All of them have fully recovered
and the last five are due to return to Athens tonight.

President of the Republic Karolos Papoulias on Friday received Marfin
Investment Group (MIG) chairman Andreas Vgeno-poulos.

To a relevant question by the President on his arrival, Vgenopoulos
replied that the preparations for the group's assumption of the
activities, as of October 1, of Olympic Air (OA) -- as the ailing
national carrier Olympic Airways has been renamed following its recent
acquisition by MIG -- "are progressing very satisfactorily".

Asked by the President about how MIG was faring amidst the global
financial crisis, Vgenopoulos replied that "everyone is working hard
under very adverse conditions", adding that "it appears that the crisis
is continuing".

He noted, however, that there have been "optimistic messages", mainly
from the US, where indications are that there will be somewhat of a
reversal by the end of the year.

"If this is the case the impact, unfortunately, will not be immediate
on Greece. We have a very difficult period ahead of us," Vgenopoulos
added.

Minister of Agriculture Sotiris Hatzigakis presented a package of
measures Friday in support of peach producers calling on them to end
their mobilizations.

Following a three-hour meeting with representatives of peach farmers
and canning industries from the prefectures of Imathia and Pella in
northern Greece, Hatzigakis announced a minimum guaranteed price of 18
cents per kilo that can increase up to 21 cents per kilo for peaches
delivered to canning industries while the labor cost of the industries
will be supported by the Employment and Vocational Training Fund
(LAEK).

Hatzigakis also stated that the Agricultural Insurance Organization
(ELGA) will offer full compensation for damages caused by adverse
weather conditions.

The peach farmers' representatives rejected the measures stating that
their mobilizations will continue, as opposed to the canning industries
that expressed the will to consider them.

Peach producers in Imathia and Pella prefectures in northern Greece
have closed off sections of the "Egnatia Odos" national motorway since
Thursday demanding state assistance to absorb surplus peach production
and calling for a settlement as regards compensation for their unsold
peach stockpiles.

The peach farmers demands include state assistance to absorb the
surplus peach production and reaching a settlement as regards
compensation for their undisposed peach production. The canning
companies maintain that they can absorb only 170,000-200,000 tons of
this year's 400,000-ton production as a result of the decreased demand
in the international market attributed to the economic crisis.

Greece's trade deficit shrank to 9.5 billion euros in April 2009, down
3.4 billion euros compared with the corresponding month last year,
Eurostat said on Friday.

The EU executive's statistics agency, in a report, said Greek exports
totaled 4.5 billion euros, while imports totaled 14 billion euros in
the month. Greek exports were down 17 pct compared with the same month
last year, while imports fell 23 pct over the same period.

The stud farm in Lazarina, central Greece, celebrates its 77th
anniversary in December, after having produced hundreds of horses.

Established in 1932 at the Zografos Farms in the plain of Thessaly, it
started out with 19 mares and 2 stallions bought in Romania with the
sole purpose of breeding horses for the then newly created Greek horse
racetrack.

The Ippotour S.A. stud farm in Lazarina is one of the largest and best
in Europe with 70 mares and 10 stallions, while its annual horse
production ranges between 50 and 60 foals - all of them British
thoroughbreds with pedigree certificates - corresponding to roughly 16
pct of the horse production in Greece.

The 700-stremma-farm is divided into 24 pastures of 25 stremma each
meeting the international specifications and allowing the animals to
have enough space to mature. Each pasture is home to 8-9 horses of
similar condition (e.g. mares with foals are kept separately etc) to
avoid conflict. The maintenance of the facilities and pastures is the
responsibility of a 40-member staff.

The plain of Thessaly has a long history in horse breeding because the
wet climate, thick vegetation and terrain are extremely favorable.

Famous "representatives" of the horses of Thessaly were Bucephalus, the
horse of Alexander the Great, and the Centaurs of Mt Pilio, while the
Trikki cavalry had accompanied the Greeks in the Trojan War.

ATEbank on Friday said its three-year business plan, for the period
2007-2009, was under revision following fundamental changes in
admissions and hypothesis on which the business plan was based as a
result of a global financial crisis.

The bank said its first half results would be announced on Wednesday,
26 August 2009, after the closing of the Athens Stock Exchange.

Folli Follie on Friday announced it would pay a 0.10 euros per share
dividend to its shareholders for the year 2008. The company said its
net dividend, after a 10 pct withholding tax, would total 0.090657
euros per share. Folli Follie said its shares will be traded in the
Athens Stock Exchange, ex-dividend from Monday, 20 July.

Greek stocks rose 0.77 pct in the last trading session of the week in
the Athens Stock Exchange, with the composite index of the market
closing at 2,230.44 points. Turnover was a moderate 135.4 million
euros. Most sectors moved upwards, with the Travel (3.18 pct),
Constructions (2.99 pct) and Insurance (1.34 pct) scoring the biggest
percentage gains of the day, while Utilities (2.50 pct), Media (1.99
pct) and Oil (0.86 pct) suffered losses.

Turnover in the Greek electronic secondary bond market shrank to 700
million euros on Friday, with the yield spread between the 10-year
Greek and German benchmark bonds at 157 basis points. The Greek bond
yielded 4.96 pct and the German Bund 3.39 pct.

The September contract on the FTSE 20 index was trading at -1.14 pct in
the Athens Derivatives Exchange on Friday, with turnover a low 52.916
million euros. Volume on the Big Cap index totaled 7,348 contracts
worth 41.703 million euros, with 26,317 open positions in the market.

Greek-Australian oncologist George Kannourakis received the Pride of
Australia Care and Compassion medal in recognition of his service to
the community of Ballarat in the State of Victoria.

The newspapers "Herald Sun" and "Weekly Times" have instituted the
Pride of Australia award and recipients are voted by their readers.

According to the Pride of Australia, he received the award because "in
an area where public transport is limited, Ballarat's oncologist,
Professor George Kannourakis, has returned good old fashion service to
each and every one of his patients. Instead of getting cancer patients
to come to him, he lightens the load by driving to his patients every
fortnight."

Dr Kannourakis studied medicine in Melbourne and worked as
pediatrician-oncologist at the Royal Children's Hospital (RCH) in
Melbourne. For two years he stayed in Boston where he was involved in
research at Harvard's Medical School. Since 1996 he practices medicine
in Ballarat.

Two people were arrested on the Tripolis-Sparta national motorway in
southern Greece on Thursday on drug possession charges following a
routine police search in their car that revealed a total of 71.5 grams
of heroin, it was announced on Friday..

Two World War II bombs have been found in Halepa, in the prefecture of
Hania on Crete, one in a ravine and another at the bottom of a well in
someone's garden.

The bomb in the ravine has already been neutralised by army
bomb-disposal experts and taken to a special area in the Agias army
base to be safely disposed of. In the next few days, authorities will
also attempt to raise the bomb found down the well but this is a more
complicated procedure since the well must first be drained by the fire
department and cleaned.

Sunny weather with higher temperatures is forecast throughout Greece on
Saturday, with some cloud from the afternoon. Winds variable, rising to
a maximun of 6 Beaufort. Temperatures will range between 19C and 39C.
Sunny and hot in Athens, with temperatures between 24C and 38C. Same in
Thessaloniki, with temperatures between 23C and 36C.

Plans to tackle the deficits in the country's five largest social
security Funds and the fight against organised crime and terrorism were
the main front-page items in Athens' dailies on Friday.

ADESMEFTOS TYPOS: "Education, construction, tourism and other sectors
to be deregulated - Bill on the 'closed' professions soon in
parliament".

APOGEVMATINI: "Warning bell for the Funds, whose deficits are a bomb
with a slow-burning fuse".

AVGHI: "Personal Data Protection Authority belies justice minister
Dendias, who said he asked for a report/recommendation on the
regulation allowing the use of surveillance cameras and establishment
of DNA files on criminals".

AVRIANI: "Felony indictment for the crime syndicate's lawyer, who had
urged Vlastos (inmate in Trikala prison believed to be the leader of
the abductions and hired killers gang that was behind the January
kidnapping of shipowner Pericles Panagopoulos) to kill Nastoulis
(notorious leader of another major organised crime gang".

ELEFTHEROTYPIA: "The Funds have dried up - 4.7 billion euros are needed
for until the end of the year, in addition to the subsidy".

ESTIA: "Timid measures by the government - No determination for deep
changes".

ETHNOS: "The Funds are sinking into a 19 billion euros hole".

KATHIMERINI: "The Funds need another 4.7 billion euros, according to
the employees - Contribution-evasion rampant".

LOGOS: "The major social security Funds heading towards collapse -
Visible danger of their not being able to pay the pensions".

RIZOSPASTIS: "Implementation of Bolkestein Directive (for creating a
single market for services in the EU internal market) with painful
consequences for the working people - The monoplies in the services
sector will be strengthened".

TA NEA: "The door is opening to the 'Polish plumber' - Bill to be
tabled in parliament provides for elimination of the current
restrictons on the practice of a series of professions by professionals
from all over the EU in Greece".

TO VIMA: "The Chinese 'steam engine' has started to accelerate - Growth
rate at 7.9 percent, industrial production at 10.7 percent".

VRADYNI: "24 categories of professionals to be deregulated - First step
for the opening of the 'closed' professions".

President of the Republic of Cyprus Demetris Christofias pointed out on
Friday that the solution of the Cyprus problem is a difficult aim to
meet but is nevertheless a dire necessity, since only a solution would
safeguard the future of the country and people.

He expressed hope that Turkey would understand that meeting its
obligations towards the EU and Cyprus, as well as maintaining a
constructive stance in the Cyprus problem, were to its own benefit,
noting that Cyprus would be monitoring Turkey's EU accession course, in
view of the progress report of December.

Speaking at an event at the Presidential Palace to mark the anniversary
of the 1974 coup and Turkish invasion, President Christofias said that
''it is necessary to remember and correctly interpret all the events
that led to the tragedy of 1974 because, without the correct reading of
the historical events, history cannot act as a compass in our struggle
to reach a just, under the circumstances, viable and functional
solution of the Cyprus problem.''

President Christofias said everyone should know the role foreign
decision making centres played in the events of 1974 and also pointed
out the responsibilities of Cyprus.

''We assure the people that we will ceaselessly and unwearyingly
continue the struggle for justice. To justify those who suffered, our
refugees, enclaved, wounded, disabled and dead. To justify the
relatives of our missing persons, who for 35 years are living with the
angst of the determination of the fate of the loved ones,'' he added.

He pointed out that while the Greek Cypriots are mourning the tragedy,
the Turkish Cypriot side is celebrating the division of the island.

''In practice, the losers are both the Greek Cypriots and Turkish
Cypriots,'' President Christofias pointed out, adding that the solution
of the Cyprus problem would heal the wounds of division and would
reunite the territory, people, institutions and economy of the island,
in the framework of a bizonal bicommunal federation, which would allow
Cyprus to function within the EU.

President Christofias said ''it is time for Turkey to see and
acknowledge its responsibilities for the tragedy of 1974 and the
continuing unacceptable situation in Cyprus,'' adding that within the
EU, ''the United Federal Republic of Cyprus will not need guarantees
and guarantors.''

Commenting on Turkish statements regarding the guarantees, President
Christofias said the chapter of security and guarantees was currently
being discussed at the negotiating table with the Turkish Cypriot side,
adding that the treaties of guarantee should be discussed in the
presence and with the participation of the Republic of Cyprus because
above all they concern and affect the Cypriots, Greek Cypriots and
Turkish Cypriots.

President Christofias pointed out that ''division is an option of
disaster so we must be rid of it the soonest possible,'' adding that
''our policy for reaching a solution of the Cyprus problem is based on
a comprehensive strategy,'' with the two sides in Cyprus holding the
leading roles and with the UN and the EU assisting the process.

''In order to avoid the traumatic experiences of the recent past, we
sought and this was accepted by the UN Secretary General that the
ownership of the process is Cypriot. This means that the leaders of the
two communities decide on how the process proceeds and how we can reach
a mutually acceptable agreement, which will be approved in separate and
simultaneous referenda by the two communities,'' he said.

He pointed out that the international community has accepted that no
deadlines or arbitration would be imposed.

President Christofias did not rule out reaching an agreement by
December but noted that it was necessary for Turkey and the Turkish
Cypriot leadership to make corrective moves concerning the content of
the solution.

''This is why it is necessary for the international community and
especially the EU to exert influence on Turkey, in the light of its EU
accession course and European aspirations, to change its stance and
cooperate towards a solution. This is what we are requesting from the
EU, keeping in mind Turkey's EU progress report in December,'' he
added.

President Christofias reiterated that the Republic of Cyprus supports
Turkey's European prospects as long as Turkey meets its obligations and
commitments towards the EU and Cyprus.

''The stance of the Republic of Cyprus in December will depend on
Turkey's stance. Until then we will continue to monitor developments,''
in cooperation with Greece and Cyprus' European partners, he said.

He expressed hope that ''Turkey will at last understand that meeting
its obligations towards the EU and Cyprus, as well as maintaining a
constructive stance in the Cyprus problem, are to its own benefit.''

Regarding Turkish remarks that a solution to the Cyprus problem should
be adopted as EU law, President Christofias said this position is
''expressly dismissed'' and that the solution should provide for a
bizonal bicommunal federation with political equality, as set out in UN
resolutions, a single state with a single sovereignty, citizenship and
international identity.

''The solution of the Cyprus problem is a difficult aim to meet.
However, it is a dire necessity because this is the only way in which
to safeguard the future of our country and people,'' he said.

President Christofias pointed out that ''we knew the difficulties from
the outset'' and called on the people of Cyprus ''to remain calm and
not be misled by remarks or alarmism referring to pessimistic or
dangerous scenarios, to continue supporting the efforts for a solution
of the Cyprus problem.''

''Our positions and aims are clear. We know what we want, what we are
pursuing and we are working hard to achieve it,'' he said and pointed
out the necessity for ''unity and solidarity on the home front.''

Cyprus, which joined the EU in 2004, has been divided since 1974, when
Turkey invaded and occupied its northern third.

President Christofias and Turkish Cypriot leader Mehmet Ali Talat have
been engaged in UN-led direct negotiations since September 2008, with
an aim to reunite the island.

President of the Republic Demetris Christofias has described as "very
significant" the first reading of issues on aliens, immigration, asylum
and citizenship - as part of the chapter on governance and power
sharing - to take place at the next meeting he will have with Turkish
Cypriot leader Mehmet Ali Talat.

In his remarks after his 37th meeting Friday with Talat, in the context
of UN-led negotiations, Christofias said they talked about security and
each side presented its initial positions on the issue and there was a
discussion.

Next week, he added, the two will also discuss under the first reading
governance and power sharing and in the context of governance and power
sharing they will discuss issues relating to aliens, immigration,
asylum and citizenship.

He clarified that the issue of security will probably finish next week
and then the procedure which he described will commence within the
context of governance. "This issue for us is very significant," he
added.

Asked to comment on the Turkish position that the issue of guarantees
in a future settlement is non-negotiable, the president said he
reserved the right to reply to such statements in his speech later, on
the occasion of the 1974 coup and the Turkish invasion and occupation
of the island's northern third.

"I do not agree with the view that one or the other side should talk
about red lines - as long as negotiations continue - as a matter of
principle. By this I mean that the Turkish side cannot, legally
speaking, talk about non-negotiable issues", the president underlined.

He also said that during the talks, he provides specific and documented
answers on these issues. "Our aim is to create a Cyprus which will be
truly independent, united, that will secure its territorial integrity
and sovereignty, its people will enjoy all freedoms and human rights in
a bizonal, bicommunal federation which will restore the human rights
and freedoms of all Greeks and Turkish Cypriots in conditions of
peace", he said.

Christofias congratulated a group of young Turkish Cypriots who offered
Talat - before Friday's meeting - two bouquets of olive branches with
the word "peace" written in English, Greek and Turkish. Talat handed
Christofias one of the bouquets.

"I congratulate these young people, who consider themselves peace
activists working for the reunification of Cyprus and I told Talat that
I hope we both share the same feelings," said Christofias.

Cyprus has been divided since 1974, when Turkey invaded and occupied
its northern third. President Christofias and Talat have been engaged
in direct negotiations since September 2008, with an aim to reunite the
island.

President Demetris Christofias and Turkish Cypriot leader Mehmet Ali
Talat discussed here Friday the security issue relating to guarantees,
during their 37th meeting, in the framework of the UN-led direct
negotiating process, aiming at finding a solution to the Cyprus
problem.

In statements after the meeting which lasted for 2 and half hours, UN
Secretary General's Special Advisor on Cyprus, Alexander Downer said
that two leaders "predominantly discussed the security issue in the
plenary session with the United Nations presence".

He noted that "at one point they had a brief tete-a-tete meeting that
lasted for about 5-10 minutes".

Downer announced that "next week, the leaders will continue to discuss
security and they will also discuss under the first reading governance
and power sharing", adding that "in the context of governance and power
sharing they will discuss aliens, immigration, asylum and
citizenship".

He also said that "the leaders had at the end of the discussion today a
brief discussion just to review the mechanics of the Limnitis
agreement, the opening of the Limnitis crossing".

The top UN envoy on Cyprus pointed out that "the European Union is now
ready to fund the preliminary study for the construction of the entire
portion of the road inside and outside the buffer zone".

He said it has been agreed that funding for the preliminary study will
proceed, noting this "has to be done to make an assessment of the cost
of the construction".